MINISTERS are facing a mutiny from within Scotland's local authorities as Moray break ranks and proposes the first council tax rise in almost a decade.
The authority said bills could rise by almost a fifth as it faces spending cuts next year of around £12million, while Highlands Council is also exploring the prospect of introducing a hike to save £50m.
A number of other councils have raised the potential of joining Moray, with several looking at the option ahead of setting their budgets next month and the Highlands leadership encouraging Argyll and Bute to follow suit.
However, the prospect of a domino effect across the country's 32 councils remains highly unlikely with authorities in the west of Scotland telling The Herald they had all but ruled out the move.
With the Scottish Government having routinely issued warnings of financial penalties running into millions of pounds to any council raising the tax, most authorities would need to make double digit hikes to make any rise worthwhile.
And despite unanimity across local government that the freeze places massive financial restrictions on councils, it remains a popular policy and could deliver a critical blow to any administration raising it before it is replaced in the next year or so.
Moray's move comes less than a month after the Scottish Government announced the grant to local government would be cut by £500m in the next year, prompting warnings many councils would find the burden impossible to shoulder without a council tax rise.
The north east authority said its bills could rise by as much as 18 per cent, or £204 a year for a Band D property and up to over £400, if the proposals are voted on by councillors next month.
It is the second dramatic move by the council in the last few years, following a previous decision to axe its entire arts budget and shut libraries to save cash.
Leader of the independent/Conservative administration Stewart Cree said the loss of £5m of Scottish Government funding on top of financial shortfall of £6.8m and a £150,000 penalty for failing to meet teaching targets had led to the decision.
He said the authority was aware there would be penalties imposed by ministers and Moray faced forfeiting £1.1m currently allocated to offset the council tax freeze.
Mr Cree said: “This level of financial reduction has placed an entirely new dimension on our deliberations. We have to recognise that there is no way we can achieve this level of savings by efficiencies alone.
“Equally, we do not believe that the people of Moray should have to see the services and facilities that they cherish so much continue to deteriorate and that is why we have decided to consider increasing council tax to a level that would protect services both now and in the future."
A spokesman for local government umbrella group Cosla said: “We got a crystal clear steer from council leaders at the end of December that the package of measures for local government within the budget, including the council tax freeze, is totally unacceptable.
“Not only have we got a huge cash cut but also additional pressures included which will see job losses and services slashed. This is all because of policy choices from Scottish Government .
“However we are still in active negotiations with the Scottish government around the 2016/17 settlement."
A Scottish Government spokesman said all public organisations had to operate more efficiently to protect public services, blaming the cut in cash from Westminster.
He said: "Discussions on the implementation of a package of measures are ongoing so the announcement by Moray Council is both unnecessary and premature.”
Moray MP Angus Robertson said: “I am utterly incredulous that a Tory Council Leader is backing an 18 per cent tax rise when the cause of the pressure on council budgets is the austerity economics of his own Tory Chancellor."
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